Lala's music service tries one more time

Samantha Rose Hunt, 21st October 2008

Palo Alto (CA) - Tonight, LaLa will go live offering individuals a fresh new way to not only expand, but also easily manage their personal music collections: the new service will allow users to stream music they store on their home PC to any other device they own, as long as it is connected to the Internet.

You might have heard of Lala before. LaLa is a three year old Internet music start-up located in Palo Alto California. The site offers ad-free music browsing, and a competitive feature set, but isn’t exactly easy to use and might not settle well with individuals used to services such as iTunes.

On two other occasions, the company made an effort to change the face of the music industry. The first offered a CD mail-swapping service with the same business concept as Netflix in 2006. The second came in 2007 with a service that offered free streaming music from the Warner Music catalog. Within weeks, the service closed and was no longer available and the company began searching for other methods to provide music to the people, thus developing the current business model they are operating with.

The third version is scheduled to launch later today: The revised Lala first analyzes the music you currently have in your collection and creates a digital locker for that music. You are then free to stream it free of charge at any point in time, from any computer or device that is connected to the Internet.

This feature makes the service pretty intriguing, as your local music becomes mobile. Almost 10 years ago, record labels fought in court against a similar service offered by MP3.com. Now it seems that the industry has granted such licenses to Lala, which shows that the music industry in fact is bowing to consumer pressure and is experimenting with evolutionary models for music distribution.

Lala encourages users to search for and purchase music in two different ways. First, Lala allows you to listen to streaming music on the site without downloading. Instead, users pay 10 cents and can listen to the song. Every customer who opens an account begins with 50 free credits. Lala could run into some competition in this arena as sites such as Imeem, MySpace Music and Last.fm offer such a service for free.

Lala has its own MP3 download store, with prices that are competitive with Apple’s iTunes, and Amazon’s music store. Music purchased from Lala is added to your web collection, meaning it is instantly mobile.

Geoff Raston, chief executive of Lala and former chief product officer from Yahoo, feels that other music services will find that it is difficult to make any money when paying licensing fees to music labels. He also claims that music sites supported by advertising are cluttered and hard to navigate. People don’t want to be slowed down with ads, and they want the opportunity to find music, he said.

In an effort to make the business model work this time around, the company needs to convince 3% to 4% of its customers that paying for music in Lala’s environment makes sense.